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Catalonia intends to hold a referendum on independence on 1 October. We think Catalans will vote in favour of independence, but turnout will be low. Hence, Catalonia will stay within Spain and use the outcome to negotiate more autonomy for the region.

While Merkel was the unsurprising winner of yesterday’s elections, the outcome suggests a shift in the German political landscape as the populist far-right AfD came in third. The process of finding a workable coalition starts now, but we may not see a new government before Christmas.

Global economic growth accelerates this and next year. Though for many central banks their inflation target remains out of reach. As such, monetary policy normalisation is not yet on the cards, while it is needed to structurally lift economic growth.

We expect growth to remain healthy for the rest of this year before declining slightly next year. Merkel will likely be re-elected for another four-year term after elections in September. She is benefitting from the strong German economy.